CWB - the grain handler that used to be called "the Canadian Wheat Board" - has announced plans to build its first two grain elevators in Western Canada.
Construction has started on facilities at Bloom, just west of Portage, Manitoba and near Colonsay, Saskatchewan.
The building of the infrastructure needed to source grain from farmers is part of the former single desk grain marketer's plan for becoming a private company by 2017, as required under federal legislation.
Although CWB is still operating under the federal government's oversight, funding for the new elevators is not coming from government sources, says Dayna Spiring, CWB's chief strategy officer and general counsel.
"The new builds are going to be paid for over a couple of years. We've used a combination of retained earnings and commercial borrowings to pay for them," she explains.
Some grain growers argue CWB is using "farmers' money" to build the new elevators, as the retained earnings Spiring refers to were likely accrued during the single desk era, when the CWB was "farmer-controlled."
"I would say they are wrong," says Spiring. "The money was built up over a period of time through trading activities and through activities of the CWB. It was never farmers' money. It was never pool account money and those arguments are not correct. I think the majority of farmers understand that and are very excited about the fact CWB is going forward and we're going to be another strong and viable competitor in the industry."
Farmers can acquire future equity in CWB by selling grain through the agency, she notes.
"For every tonne a farmer delivers to CWB, whether through the pools or cash prices, they earn $5 of equity in CWB after privatization. Our goal is to make farmers owners of their value chain," explains Spiring.
CWB is also seeking an investment partner to backstop its operations when privatization happens, she adds.
"There's going to be the need to replace the government and some of the guarantees and different things the government provides to us," says Spiring. "We're in the process of figuring out who likely investors might be."
Source: SteinbachOnline